Governor Pushes Homebuyer Tax Credit

A homebuyer tax credit that proved successful in stimulating sales in California last year could be returning in the near future.

Gov. Schwarzenegger is asking for $200 million to be set aside in the state budget to finance a $10,000 tax credit for buyers of both new and existing homes.

Last year’s program included $100 million in funding, and it was exhausted in just a few months.

“Last year when we extended the tax credit it started a whole chain reaction,” Schwarzenegger said at an event in Fresno on Jan. 13 to promote the tax credit. “Homes were sold, and therefore builders began pulling permits again, subcontractors began hiring again.”

The chain continued with roofers, carpenters, plumbers and cement pourers all getting back to work, said Schwarzenegger.

“And so it created a lot of great, great jobs,” he added.

CBIA Chairman John Young, speaking at the same event, said the 2009 tax credit was a huge success for builders.

“In 2009, when we got the state tax credit, my particular homebuilding inventory was reduced by 50 percent,” said Young. “We got more buyers, more traffic, and we were able to sell more homes to young families that needed their first home.”

Young called on lawmakers to enact the program as soon as possible.

The state credit would run in tandem with a federal homebuyer tax credit, which was extended in the fall and runs until the end of April.

The homebuyer tax credit is part of a jobs creation initiative announced by Schwarzenegger during his State of the State speech earlier this month.

“For our jobs creation initiative, I think housing is a very important part of this puzzle,” said Schwarzenegger. “And so we want to do everything we can to stimulate that market.”

Al Smith, president of the Greater Fresno Area Chamber of Commerce, said owning a home has always been the American dream. But when that dream becomes a reality, it also has a stabilizing effect on communities.

“There are so many, so many positives about the ability to own a home, and this program that the Governor has put in place, I think, affords it to people who may never have had that opportunity before,” said Smith. “It creates a reasonable market for homeowners, it creates jobs, it creates construction, it clears the inventory out of the pipeline and creates the ability to create new homes.”

Schwarzenegger said jobs creation and stimulating the economy are his top priority in 2010, and the tax credit accomplishes both goals.

“We create demand the build new homes, and that’s exactly what we want to do,” said Schwarzenegger. “We want to get people off the fence and move them into homes.”

Greg Robertson is the editor of California Builder. He can be reached at grobertson@cbia.org. Photo: Justin Short, Office of the Governor